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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38624

 

Vaccinex, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

16-1603202

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1895 Mount Hope Avenue

Rochester, New York

14620

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (585) 271-2700

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

VCNX

Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

As of August 8, 2023, the registrant had 65,941,086 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

 

VACCINEX, INC.

FORM 10-Q

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Condensed Balance Sheets (Unaudited)

 

3

 

 

 

 

Condensed Statements of Operations and Comprehensive Loss (Unaudited)

 

4

 

 

 

 

 

Condensed Statements of Stockholders’ Equity (Unaudited)

 

5

 

 

 

 

Condensed Statements of Cash Flows (Unaudited)

 

6

 

 

 

 

Notes to Condensed Financial Statements (Unaudited)

 

7

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

 

Item 4.

Controls and Procedures

 

26

 

 

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1A.

Risk Factors

 

27

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.................................................................................

 

29

 

 

 

 

Item 6.

Exhibits

 

30

 

 

 

 

Signatures

 

31

 

2


 

 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VACCINEX, INC.

Condensed Balance Sheets (Unaudited)

(in thousands, except share and per share data)

 

 

 

As of
June 30, 2023

 

 

As of
December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,908

 

 

$

6,391

 

Accounts receivable

 

 

11

 

 

 

175

 

Prepaid expenses and other current assets

 

 

760

 

 

 

912

 

Total current assets

 

 

2,679

 

 

 

7,478

 

Property and equipment, net

 

 

177

 

 

 

189

 

Operating lease right-of-use asset

 

 

229

 

 

 

310

 

TOTAL ASSETS

 

$

3,085

 

 

$

7,977

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,608

 

 

$

1,518

 

Accrued expenses

 

 

1,533

 

 

 

781

 

Current portion of long-term debt

 

 

75

 

 

 

74

 

Operating lease liability

 

 

167

 

 

 

164

 

Total current liabilities

 

 

3,383

 

 

 

2,537

 

Long-term debt

 

 

63

 

 

 

101

 

Operating lease liability, net of current portion

 

 

62

 

 

 

146

 

TOTAL LIABILITIES

 

 

3,508

 

 

 

2,784

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Common stock, par value of $0.0001 per share; 100,000,000 shares authorized
   as of June 30, 2023, and December 31, 2022;
65,669,245 and 49,881,613
   shares issued as of June 30, 2023 and December 31, 2022, respectively;
   
65,668,393 and 49,880,761 shares outstanding as of June 30, 2023
   and December 31, 2022, respectively

 

 

7

 

 

 

5

 

Additional paid-in capital

 

 

331,279

 

 

 

324,875

 

Treasury stock, at cost; 852 shares of common stock as of June 30, 2023 and December 31, 2022, respectively

 

 

(11

)

 

 

(11

)

Accumulated deficit

 

 

(331,698

)

 

 

(319,676

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

(423

)

 

 

5,193

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

3,085

 

 

$

7,977

 

 

The accompanying notes are an integral part of these condensed financial statements.

3


 

 

VACCINEX, INC.

Condensed Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

-

 

 

$

-

 

 

$

550

 

 

$

-

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,050

 

 

 

3,843

 

 

 

8,862

 

 

 

6,809

 

General and administrative

 

 

2,027

 

 

 

1,558

 

 

 

3,751

 

 

 

3,186

 

Total costs and expenses

 

 

7,077

 

 

 

5,401

 

 

 

12,613

 

 

 

9,995

 

Loss from operations

 

 

(7,077

)

 

 

(5,401

)

 

 

(12,063

)

 

 

(9,995

)

Interest expense

 

 

-

 

 

 

(1

)

 

 

(1

)

 

 

(2

)

Other income (expense), net

 

 

17

 

 

 

19

 

 

 

42

 

 

 

19

 

Loss before provision for income taxes

 

 

(7,060

)

 

 

(5,383

)

 

 

(12,022

)

 

 

(9,978

)

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss attributable to Vaccinex, Inc. common stockholders

 

$

(7,060

)

 

$

(5,383

)

 

$

(12,022

)

 

$

(9,978

)

Comprehensive loss

 

$

(7,060

)

 

$

(5,383

)

 

$

(12,022

)

 

$

(9,978

)

Net loss per share attributable to Vaccinex, Inc. common
   stockholders, basic and diluted

 

$

(0.12

)

 

$

(0.13

)

 

$

(0.22

)

 

$

(0.25

)

Weighted-average shares used in computing net loss per share
   attributable to Vaccinex, Inc. common stockholders, basic and
   diluted

 

 

60,421,128

 

 

 

42,664,051

 

 

 

55,150,945

 

 

 

40,711,167

 

 

The accompanying notes are an integral part of these condensed financial statements.

4


 

VACCINEX, INC.

Condensed Statements of Stockholders’ Equity (Unaudited)

(in thousands, except share data)

 

 

 

Common Stock

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Common
Stock
Shares

 

 

Amount

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

Balance as of January 1, 2022

 

 

30,801,962

 

 

$

3

 

 

$

307,281

 

 

 

852

 

 

$

(11

)

 

$

(299,861

)

 

$

7,412

 

Issuance of Common Shares

 

 

11,862,941

 

 

 

1

 

 

 

13,229

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,230

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

141

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

141

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,595

)

 

 

(4,595

)

Balance as of March 31, 2022

 

 

42,664,903

 

 

 

4

 

 

 

320,651

 

 

 

852

 

 

 

(11

)

 

 

(304,456

)

 

 

16,188

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

138

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

138

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,383

)

 

 

(5,383

)

Balance as of June 30, 2022

 

 

42,664,903

 

 

$

4

 

 

$

320,789

 

 

 

852

 

 

$

(11

)

 

$

(309,839

)

 

$

10,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Common
Stock
Shares

 

 

Amount

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

Balance as of January 1, 2023

 

 

49,881,613

 

 

$

5

 

 

$

324,875

 

 

 

852

 

 

$

(11

)

 

$

(319,676

)

 

$

5,193

 

Issuance of Common Shares

 

 

4,975,608

 

 

 

-

 

 

 

2,040

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,040

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

129

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

129

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,962

)

 

 

(4,962

)

Balance as of March 31, 2023

 

 

54,857,221

 

 

 

5

 

 

 

327,044

 

 

 

852

 

 

 

(11

)

 

 

(324,638

)

 

 

2,400

 

Issuance of Common Shares

 

 

10,812,024

 

 

 

2

 

 

 

4,109

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,111

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

126

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

126

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,060

)

 

 

(7,060

)

Balance as of June 30, 2023

 

 

65,669,245

 

 

$

7

 

 

$

331,279

 

 

 

852

 

 

$

(11

)

 

$

(331,698

)

 

$

(423

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 


 

 

VACCINEX, INC.

Condensed Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(12,022

)

 

$

(9,978

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

61

 

 

 

95

 

Stock-based compensation

 

 

255

 

 

 

279

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

164

 

 

 

-

 

Prepaid expenses and other current assets

 

 

152

 

 

 

(45

)

Accounts payable

 

 

90

 

 

 

(795

)

Accrued expenses

 

 

753

 

 

 

115

 

Net cash used in operating activities

 

 

(10,547

)

 

 

(10,329

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(49

)

 

 

(52

)

Net cash used in investing activities

 

 

(49

)

 

 

(52

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

1,150

 

 

 

3,519

 

Payments of long-term debt

 

 

(38

)

 

 

(37

)

Proceeds from private offering of common stock

 

 

5,001

 

 

 

9,710

 

Net cash provided by financing activities

 

 

6,113

 

 

 

13,192

 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(4,483

)

 

 

2,811

 

CASH AND CASH EQUIVALENTS–Beginning of period

 

 

6,391

 

 

 

8,589

 

CASH AND CASH EQUIVALENTS–End of period

 

$

1,908

 

 

$

11,400

 

 

The accompanying notes are an integral part of these condensed financial statements.

6


 

VACCINEX, INC.

Notes to Condensed Financial Statements (Unaudited)

Note 1. COMPANY AND NATURE OF BUSINESS

Vaccinex, Inc. (the “Company”) was incorporated in Delaware in April 2001 and is headquartered in Rochester, New York. The Company is a clinical-stage biotechnology company engaged in the discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs, including cancer, neurodegenerative diseases, and autoimmune disorders. Since its inception, the Company has devoted substantially all of its efforts toward product research, manufacturing and clinical development, and raising capital.

The Company is subject to a number of risks and uncertainties common to other early-stage biotechnology companies including, but not limited to, dependency on the successful development and commercialization of its product candidates, rapid technological change and competition, dependence on key personnel and collaborative partners, uncertainty of protection of proprietary technology and patents, clinical trial uncertainty, fluctuation in operating results and financial performance, the need to obtain additional funding, compliance with governmental regulations, technological and medical risks, management of growth and effectiveness of marketing by the Company. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability.

Going Concern

These condensed financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred significant losses and negative cash flows from operations since inception and expects to incur additional losses until such a time it can generate significant revenue from the commercialization of its product candidates. The Company had negative cash flow from operations of $10.5 million for the six months ended June 30, 2023, and an accumulated deficit of $331.7 million as of June 30, 2023. Given the Company’s projected operating requirements and its existing cash and cash equivalents, the Company is projecting insufficient liquidity to sustain its operations through one year following the date that the condensed financial statements are issued. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, management is currently evaluating different strategies to obtain the required funding of future operations. Financing strategies may include, but are not limited to, the public or private sale of equity, debt financing or funds from other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. There can be no assurances that the Company will be able to secure additional financing, or if available, that it will be sufficient to meet its needs or on favorable terms. Because management’s plans have not yet been finalized and are not within the Company’s control, the implementation of such plans cannot be considered probable. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

The condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

7


 

 

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The accompanying unaudited condensed financial statements reflect the accounts and operations of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information (Accounting Standards Codification (“ASC”) 270, Interim Reporting) and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these financial statements do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with GAAP. In the opinion of management, the condensed financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented.

These condensed financial statements should be read in conjunction with the Company’s audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023.

Use of Estimates

These condensed financial statements have been prepared in conformity with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed financial statements and the reported amount of expenses during the reporting period. Such management estimates include those relating to assumptions used in the valuation of stock option awards, and valuation allowances against deferred income tax assets. Actual results could differ from those estimates.

Concentration of Credit Risk, Other Risks and Uncertainties

The Company is subject to a number of risks, including, but not limited to, the lack of available capital; the possible delisting of our common stock from Nasdaq, possible failure of preclinical testing or clinical trials; inability to obtain regulatory approval of product candidates; competitors developing new technological innovations; potential interruptions in the manufacturing and commercial supply operations; unsuccessful commercialization strategy and launch plans for its proprietary drug candidates; risks inherent in litigation, including purported class actions; market acceptance of the Company’s products; and protection of proprietary technology.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Cash equivalents are deposited in interest-bearing money market accounts. Although the Company deposits its cash with multiple financial institutions, cash balances may occasionally be in excess of the amounts insured by the Federal Deposit Insurance Corporation. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date.

The Company has historically raised capital in transactions with investors that include members of its board of directors and entities controlled by certain board members. As such, the Company's directors, directly and indirectly, control a significant ownership percentage of the Company. The Company can provide no assurances that future financing will be available in sufficient amounts or on terms acceptable to it or that its directors or entities controlled by certain board members will be willing or able to participate in future capital raises by the Company.

The Company depends on third-party manufacturers for the manufacture of drug substances and drug product for clinical trials. The Company also relies on certain third parties for its supply chain. Disputes with these third- party manufacturers or shortages in goods or services from third-party suppliers could delay the manufacturing of the Company’s product candidates and adversely impact its results of operations.

8


 

Recently Issued Accounting Pronouncements

In the normal course of business, the Company evaluates all new Accounting Standards Updates ("ASU") and other accounting pronouncements issued by the Financial Accounting Standards Board ("FASB"), Securities and Exchange Commission ("SEC"), or other authoritative accounting bodies to determine the potential impact they may have on its condensed financial statements. The Company does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on its condensed financial statements.

 

Note 3. BALANCE SHEET COMPONENTS

Property and Equipment

Property and equipment consist of the following (in thousands):

 

 

 

As of
June 30, 2023

 

 

As of
December 31, 2022

 

Leasehold improvements

 

$

3,259

 

 

$

3,259

 

Research equipment

 

 

3,542

 

 

 

3,515

 

Furniture and fixtures

 

 

350

 

 

 

350

 

Computer equipment

 

 

343

 

 

 

321

 

Property and equipment, gross

 

 

7,494

 

 

 

7,445

 

Less: accumulated depreciation and amortization

 

 

(7,317

)

 

 

(7,256

)

Property and equipment, net

 

$

177

 

 

$

189

 

 

Depreciation expense related to property and equipment was $30,000 and $61,000 for the three and six months ended June 30, 2023 and $54,000 and $95,000 for the three and six months ended June 30, 2022, respectively.

 

Accrued Expenses

Accrued expenses consist of the following (in thousands):

 

 

 

As of
June 30, 2023

 

 

As of
December 31, 2022

 

 

 

 

 

 

 

 

Accrued clinical trial cost

 

$

1,109

 

 

$

335

 

Accrued payroll and related benefits

 

 

336

 

 

 

308

 

Accrued consulting and legal

 

 

86

 

 

 

127

 

Accrued other

 

 

2

 

 

 

11

 

Accrued expenses

 

$

1,533

 

 

$

781

 

 

Note 4. FAIR VALUE MEASUREMENTS OF FINANCIAL MEASUREMENTS

 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recorded at fair value on a nonrecurring basis in the condensed balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, and long-term debt. Cash, accounts receivable, accounts payable, accrued liabilities, and debt, are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date of such amounts.

9


 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Fair value measurement standards also apply to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). For the Company, these financial assets and liabilities include its cash equivalents deposited in money market funds. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.

The assets’ or liabilities’ fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following table sets forth the fair value of the Company’s financial assets by level within the fair value hierarchy (in thousands):

 

 

 

As of June 30, 2023

 

 

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

741

 

 

$

741

 

 

$

-

 

 

$

-

 

Total Financial Assets

 

$

741

 

 

$

741

 

 

$

-

 

 

$

-

 

 

 

 

As of December 31, 2022

 

 

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

3,975

 

 

$

3,975